Lion recovery partition vs install dmg


im trying understand difference between recovery partition lion auto installs on local hd vs install dmg. lion recovery partition 650mb while install dmg 4gb. booted recovery partition play around in , see whats inside , looks install dmg does, how can 650mb files allow me erase hd , fresh os install?
 

the install dmg has stand-alone properties, uninstallers rosetta , other 32-bit applications. it's packaged auto-run.
 


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